Australian household debt puts UK into perspective

Many people go into the New Year with increased debt after spending over Christmas or booking summer holidays. Others also decide to move to a larger or more expensive home, especially if they enjoyed an end-of-year pay rise or bonus.

People in the UK owed £1.455 trillion in personal debt at the end of last year, with the average debt per household being £53,904 including mortgages. This is according to statistics provided by The Money Charity.

That’s a lot of debt, but our friends Down Under are under a lot more financial pressure.

A report in The Guardian highlights that households in Australia have more debt than any other country in the world.

Australia leads the world in household debt

LF Economics’ research shows Australia is top of the world league for having the most indebted households relative to their gross domestic product.

Australia has $1.6 trillion in GDP but about $2 trillion in household debt, giving it a ratio of 123.08 per cent. The UK’s ratio is 85.9 per cent.

Much of Australia’s problems are due to the fact that homeowners and property investors have massive mortgages thanks to a boom in house prices.

Mortgages also tend to be the biggest single debt for many UK households.

Act quickly over debt problems

At times, it might seem as though the debt is controlling your life, especially if you have problems making the repayments due to a change in personal circumstances. If this is the case, it is always best to deal with the problem as soon as it arises.

There are measures you can take to consolidate the debts and make them more manageable.

One option could be to make an Individual Voluntary Arrangement whereby you agree with your creditors to pay off some or all of the debt. Through this system, you agree to make monthly payments to an insolvency practitioner, who then pays your creditors. This can often be a better option than going bankrupt.

You can get advice about IVAs from a company such as Carrington Dean that has specialists you can talk to about the best debt solution for you.

By consolidating your debt through an IVA, you will be able to make the right choice on how to deal with your debt in a stress-free manner.